Order in the Strategy Court

As followers of Dilbert all know, personal and office politics pervade organizational life. If pressed, therefore, most of us would agree that whenever you have a) ambitious people with a variety of visions, b) limited resources, and c) serious flaws with decision tools, any strategic decision is largely an outcome of power plays and politics.

The trouble with this “Dilbertian” view of strategy is that it is too cynical and unsystematic. It encourages executives to apply the dark arts of Machiavelli in order to influence their company’s direction and it offers no guidance to CEOs trying to make their systems generate good ideas and strategies.

There is a Better Way

Corporate decision-making doesn’t have to be reduced to the law of the jungle. In fact, we can draw on society’s evolution for inspiration. Philosophers long ago realized that the application of due process and clear rules-of-the-game for political discourse and the resolution of conflicts — a well-defined legal system, in other words — were the chief hallmarks of a healthy community.

The same, we believe, is true for corporations. Executives in search of a system of strategic planning and development that is both organized and rule-based but open to diverse perspectives, conflict, and argumentation could do a lot worse than borrow from the Law. After all, squaring this circle is precisely what a legal system is supposed to do.

Why the Model Works

Let’s look at two ways in which the Law mirrors organizational reality. Firstly, executive committee (hereafter “excom”) members resemble lawyers in they represent divergent perspectives from which “Justice” (i.e., the right strategy and decisions for the organization) should emerge. A few examples:

Customer Service VPs are supposed to keep customers happy. If they do so by customizing service, they face off against Supply Chain VPs whom are rewarded for standardizing product delivery;

HR VPs develop talent, requiring that the latter take staff away from work, thus forcing them to face-off with Operational VPs who want to keep staff working to meet quarterly forecasts;

CFOs protect the bottom line, which leads to face offs with any peer who needs to spend money to achieve their goals.

Second, excom members resemble lawyers in that they have “clients” (i.e. their staff) who want them to plead their case before the “court” (i.e. the excom). Staff expect their excom member to fight for their interests, to obtain funding for their projects and ensure cuts happen elsewhere. If executives are unsuccessful in pleading their “client’s” case, they cannot be assured of the latter’s loyalty for long.

The Benefits It Brings

Given the lousy reputation of the legal profession, we would forgive you for thinking that the “strategy-as-law” analogy and its “excom as court” corollary could increase politicking and imperil teamwork. But the fact is that it can actually bolster teamwork and support a rational process for strategy development by promoting

Clearly argued business cases. To begin with, treating strategy making as a trial process requires that advocates of a particular strategic decision brought before the Excom explain how it would advance the company’s strategy, just as judges insist lawyers justify how their case upholds the law. All too often, excom members present their case on grounds that simply reflect their unit’s perspective. As a result, they don’t create a common ground for discussion with colleagues. By obliging executives to explicitly reference the organization’s strategy, CEOs establish a common ground uniting excom members as a team, yet allowing for different perspectives to emerge.

Precedent-setting. The strategy-as-law model also provides guidance to CEOs in that it requires them to “set precedents”, that is make explicit how decisions align with the strategy, just as judges explain how their rulings respect the law. This not only helps to clarify the strategy, but also promotes “out of court settlements” between excom members: as the strategy’s contours become clearer with every “precedent”, executives bring fewer disputes before the excom, thus wasting less excom and CEO time and encouraging teamwork outside the excom.

Clean debate. Just as a lawyer’s code of conduct ensures lawyers treat each other respectfully and disclose evidence so that all parties can fully prepare, so should excom ground rules. When excom members break these rules, CEOs should take a page out of judge’s playbook and hold them “in contempt”. Too often CEOs let rule breakers off the hook and effective teamwork is the victim.

A distinction between decision-making and decision-taking. In the legal system, decision-making occurs in court where judges listen to lawyers’ arguments. Judges then exit the court for deliberation and decision-taking. This mirrors what happens in many organizations: CEOs listen to executives debate strategic issues in the excom — the decision-making phase — but they don’t deliberate and take their decision before the excom. They huddle with a few close advisors, their “inner” cabinet” who are asked to leave unit hats at the door, and it is then that decisions are taken.

A common mistake rookie CEOs make is to ask all excom members to leave their unit hats at the door at the very beginning of the process. The result is that the expression of diverse viewpoints (a main benefit of teamwork) is suppressed and political jockeying is forced underground where the strongest prevail. Trust diminishes and trade-offs inherent in strategic discussion remain hidden. With the strategy-as-law analogy, CEOs learn to make the decision-making vs. decision-taking distinction clear so that excom members know when to express their unit perspective and when to wear the CEO’s hat.

The excom as court model is not perfect (no model ever is)but it can help CEOs figure out how to support a rational, rule-based evolution of their strategy that allows executives to openly debate trade-offs without being accused of parochialism. And, after all, isn’t that what good teamwork is all about?

Charles Galunic is the Aviva Chaired Professor of Leadership and Responsibility at INSEAD in Fontainebleau, France. Follow him on Twitter: @CharlesGalunic

Jacques Neatby advises North American and European executive teams and is a guest lecturer on executive team effectiveness in the HEC Paris and McGill-HEC Montreal executive MBA programs

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